KAEPY

CEO Mori mentioned that in fiscal 2025, revenue and profit decreased. For fiscal 2026, expected recurring profit is JPY 290 billion with main factors being foreign exchange movement, fuel price fluctuations, lower nuclear capacity factor and higher costs. The group aims to prioritize safety, lead Japan's energy sector, and provide a vital platform for a sustainable society by expanding into ICT, real estate and new businesses. From FY '26, will revise shareholder return policy to target a consolidated payout ratio of 25% to 35% and maintain or increase dividends. EVP Tanaka explained cumulative capital allocation from fiscal '26 to '28, aiming to generate cash through asset recycling and execute JPY 2.5 trillion of investments over 3 years. GM Kikuoka explained financial results details, including ordinary profit by segment and major factors affecting fiscal 2026's consolidated ordinary profit such as decrease in nuclear capacity factor, increase in fuel costs due to Middle East situation, and inflation - related expenses and maintenance work.

For fiscal 2026, expect a recurring profit of JPY 290 billion, a decrease of JPY 228.5 billion. Plan to pay an annual dividend of JPY 80 per share for FY 2026, an increase from FY '25. Aim to achieve a consolidated payout ratio of 25% to 35% and ROE of over 8% on a 3 - year average. Anticipate challenges from factors like foreign exchange movement, fuel price fluctuations, lower nuclear capacity factor and higher costs, but will continue steady investment including maintenance and growth investment. Also plan to generate over JPY 380 billion in cash through asset recycling.

For FY 2025, consolidated revenue was JPY 4,056.6 billion and recurring profit was JPY 518.5 billion, a decrease from FY '24. For FY 2026, expected recurring profit is JPY 290 billion, a decrease of JPY 228.5 billion. Ordinary profit by segment increased year - on - year on all segments except the Energy segment. The Energy segment's profit decreased by JPY 33.9 billion year - on - year to JPY 377.3 billion due to a decline in nuclear capacity factor and increases in other expenses and maintenance costs despite positive impact from lower fuel prices. Retail electricity sales volume amounted to 116.3 billion kilowatt hour, an increase of 800 million kilowatt hours. Electricity sales volume to other companies decreased by 4.6 billion kilowatt hour. Nuclear capacity factor decreased by 4.4% to 84.1%. Japan CIF crude oil price decreased by $11.0 per barrel to $71.4 per barrel. Exchange rate was JPY 151 to $1, appreciation of JPY 2.

Geopolitical risks, inflation, rising interest rates, population decline are progressing simultaneously. The situation in the Middle East is unpredictable which could lead to increase in fuel costs and further impact fiscal 2026 results with time lag - related losses. Uncertainties in the energy market such as prolonged large - scale maintenance works for nuclear reactors can affect nuclear capacity factor and profitability. Competition in the electricity sales market can impact electricity sales volume and related profits.

Q: On Page 5 of the financial results presentation, the guidance and KPI seem challenging. What are the assumptions and background?

A: Mori said they came to this conclusion considering factors like decline in nuclear capacity factor, increase in energy cost and higher inflation. Tanaka added about nuclear capacity factor improvement work, impact of Middle East situation on fuel cost and increase in other cost items and maintenance - related cost due to inflation.

Q: About the timing of investment and asset recycle.

A: Mori said large - scale growth investment will start one by one, and asset recycle will take opportunity as they arise.

Q: Regarding inflation and price passing on.

A: Mori said need to analyze impact in detail, try to reduce costs and create value - added to increase profits. Tanaka mentioned regulated price deliberation should be held thoroughly.

Q: About ROE of 8% target.

A: Mori said it's an aimed target, will take challenges to get there, and will consider capital policies to improve ROE.

Q: About forecast for next year's minus JPY 16 billion decrease in electricity sales.

A: Tanaka said it's due to factors like retail decline in hour, impact of temperature, customer acquisition and inspection time lag.